Iowa regulator orders BlockFi to pay $943K over alleged unregistered securities offering
The Iowa Insurance Division, or IID, a regulator responsible for many securities sales in the state, has fined crypto lending firm BlockFi more than $943,000 after allegedly offering and selling unregistered securities.
In a Tuesday announcement, the state regulator said BlockFi had “offered and sold securities in Iowa that were not registered or permitted for sale in Iowa” in addition to not being registered as a broker-dealer or agent, in violation of the state’s securities act. The IID ordered BlockFi to pay $943,396.22 as an administrative fine as well as cease and desist “from making any untrue statement of material facts regarding securities.”
“While innovations, like cryptocurrencies, may provide for growth and evolution in the financial system, it is important that regulators ensure this occurs within an appropriate framework that protects investors while still facilitating responsible capital formation,” said Iowa Insurance Commissioner Doug Ommen.
BlockFi Ordered to Pay More Than $943,000 in Iowa for Failing to Register Securitieshttps://t.co/LJIYMWX6U1
The order behind the financial penalty was part of an investigation by the United States Securities and Exchange Commission, or SEC, in which BlockFi was ordered to pay $50 million in settlement to the federal agency as well as $50 million to 32 state-level regulators. According to the IID, BlockFi allegedly made “misrepresentations and omissions about the level of risk in its loan portfolio” and claimed its institutional loans were "typically" over-collateralized when only 17% of loans the platform made in the first half of 2021 were.
“BlockFi's statements that their loans were ‘typically’ over-collateralized suggested to investors that they had secured more
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